Written Answers Nos. 172 - 190
172. Deputy Catherine Murphy asked the Minister for Finance if she will state the present procedures which a citizen in receipt of a social welfare payment must declare such income for taxation purposes; if there are different arrangements in place for different social welfare payments in respect of the declaration of income; and if he will make a statement on the matter. [18896/13]
Amharc ar fhreagraI am informed by the Revenue Commissioners that, in general, an individual with taxable income is obliged to file a tax return and pay tax under the Self Assessment system. The tax return should be used by the individual to declare all of their income sources, including payments from the Department of Social Protection (DSP). This obligation to file a tax return does not generally apply to an individual where all of that individual’s income, including payments from the DSP, is taxed under the PAYE system. In the case of a person taxed under the PAYE system, they are obliged to notify the Revenue Commissioners of any other source of income, including benefit payments from the DSP. That notification can be made in writing or the person can contact one of Revenue’s PAYE lo-call numbers with the details.
A person’s particular circumstances determine whether they are liable to pay tax on any DSP payments. For example, they may have no other sources of income and therefore are unlikely to be liable for tax on their DSP payments. However, regardless of the type of DSP payment involved the person should still notify the Revenue Commissioners to ensure that they have no other obligations. Similarly, increases or decreases in the amount of payment made by the DSP should be notified to Revenue. I am further informed that while there are significant data exchange arrangements in place between Revenue and the DSP, it is still the recipient’s responsibility to notify Revenue that they are receiving payments from the Department.
173. Deputy Robert Troy asked the Minister for Finance the measures being adopted by his Department to tackle the cross-border fuel laundering industry; and if he will make a statement on the matter. [19128/13]
Amharc ar fhreagra174. Deputy Robert Troy asked the Minister for Finance if he will consider moving towards a fuel refund/rebate scheme along the US model in order to tackle cross-border fuel laundering which would necessitate a high degree of co-operation between various Government Departments, cross-border agencies, the Northern Ireland Executive and the British Government, in order to bring this criminal activity to an end. [19129/13]
Amharc ar fhreagraI propose to take Questions Nos. 173 and 174 together.
I am advised by the Revenue Commissioners that they are very aware of the threat that fuel laundering poses both to the exchequer and to legitimate businesses and that tackling this problem is a high priority. Fuel laundering imposes significant costs on the community and poses a serious threat to tax yield and to legitimate businesses. As part of its strategy to curb illegal activity in this area, Revenue strengthened licensing requirements for traders in auto fuels in 2011 to limit the ability of fuel criminals to get laundered fuel onto the market. A new licensing requirement was introduced for traders in marked fuel oil from 1 October 2012 to limit the ability of fuel criminals to source marked fuel for laundering. In addition, Revenue introduced new supply chain controls requiring all licensed fuel retailers to make monthly returns to Revenue, from 1 January 2013, of their fuel transactions, which will provide assurance about the distribution of all fuels and identify suspicious or anomalous transactions and distribution patterns.
In the period 2011 to 2012, over 2 million litres of fuel was seized, 20 fuel laundries were detected and closed and 89 filling stations were closed because they were unlicensed or in breach of licensing conditions.
In view of the links between organised criminals and the illegal fuel trade, Revenue works closely with An Garda Síochána and other law enforcement agencies. A Cross-Border Fuel Fraud Enforcement Group, involving all relevant agencies from the State and from Northern Ireland, facilitates co-operation among these agencies in dealing with the illegal fuel trade. Arising from its work, a number of groups operating in both jurisdictions and involved in the production and distribution of laundered diesel, have been targeted for investigation.
In addition, Revenue and Her Majesty’s Revenue and Customs (HMRC) in the United Kingdom are pursuing jointly a new and more effective fuel marker for common use in both jurisdictions. A Memorandum of Understanding was agreed in 2012 by Revenue and HMRC and work on the project is proceeding. A joint ‘Invitation to Make Submissions’ (IMS), which issued in June 2012, generated international interest and twelve submissions were received by the closing date. These submissions are being evaluated jointly at present by Revenue and HMRC on the basis of agreed scientific, legal and operational criteria.
The question of introducing a rebate scheme for users of marked gas oil has been addressed in previous parliamentary debates. A change to a system of this nature would involve the establishment of an expensive repayments system and would give rise to significant costs and place an administrative burden on oil traders, users and the Revenue Commissioners. It would also pose significant cash-flow costs for those currently using marked gas oil. Marked gas oil has a wide range of uses such as the propulsion of trains, the operation of agricultural, construction and industrial machinery, commercial sea-navigation (including fishing) and for commercial and home heating purposes. Any change in the existing system would therefore impact across a wide range of users. In addition, repayment schemes are vulnerable to abuse and the introduction of a wide-ranging scheme such as that proposed would not necessarily offer greater security against fraud than the current arrangements.
175. Deputy Eric Byrne asked the Minister for Finance if he will clarify the position regarding a person (details supplied) in Dublin 12 and the collection of property tax; and if he will make a statement on the matter. [19131/13]
Amharc ar fhreagraThe Finance (Local Property Tax) Act 2012 (as amended) provides that Revenue is responsible for the administration of Local Property Tax (LPT). A key aspect of the work undertaken by Revenue in this regard was the development of a register of residential properties in the State. The register was developed using data drawn from a range of sources including Revenue’s own databases, the Local Government Management Agency database and data from utility companies. Data from the various sources were cross-checked to ensure that the register is as accurate as possible. The register is being used to issue correspondence to property owners and work is still in progress to refine it.
I am informed that, while every effort has been made to correctly match residential properties to owners, in a small percentage of cases the register contains duplicate entries for a single address. Where a property owner receives a duplicate Return in respect of a single property it is important that neither of the returns is ignored. The owner should file the correct return and advise Revenue of the duplicate either in writing or by contacting the Revenue LPT helpline at 1890 200 255. No supporting documentation is required in order to remove a duplicate entry from the LPT Register. I am advised that the property owner in question has already contacted Revenue and the duplicate property in question has now been removed from the LPT Register.
176. Deputy Stephen S. Donnelly asked the Minister for Finance if he will provide a breakdown of the ELG payments that comprise the €933m provided under the Credit Institutions (Financial Support) Act 2008, as detailed in the March Exchequer; and if he will make a statement on the matter. [19185/13]
Amharc ar fhreagra194. Deputy Pearse Doherty asked the Minister for Finance if he will provide a breakdown of the €933.775million eligible liabilities scheme payment in the March 2013 Exchequer Statement between senior unguaranteed unsecured bondholders, senior unguaranteed secured bondholders, senior guaranteed secured bondholders, junior bondholders, depositors and others. [18448/13]
Amharc ar fhreagraI propose to take Questions Nos. 176 and 194 together.
Following the liquidation of IBRC on 7 February 2013, all eligible liabilities covered by the ELG Scheme are entitled to apply for repayment under the Scheme. IBRC had two bonds which were guaranteed under the Scheme and which had ELG certificates. Both were senior unsecured bonds. During March 2013, the two ELG Scheme guaranteed bonds were repaid in full to the Bond Trustee, for distribution to bondholders. This amounted to a total of €933.775 million.
177. Deputy Sandra McLellan asked the Minister for Finance if he will exempt women who do not receive a full salary top-up from their employers from the proposed tax on maternity benefit; and if he will make a statement on the matter. [18224/13]
Amharc ar fhreagra181. Deputy Finian McGrath asked the Minister for Finance if he will exempt women who do not receive a full salary top-up from maternity benefit tax which will put many women under financial pressure just as their baby is being born; and if he will make a statement on the matter. [18269/13]
Amharc ar fhreagra250. Deputy Derek Nolan asked the Minister for Finance if he will consider exempting women who do not receive a salary top-up from their employer when on maternity leave from the tax on maternity benefit; if he acknowledges the fact that not all employers pay a top-up payment and many women could have a significantly reduced income when on maternity leave;; and if he will make a statement on the matter. [18919/13]
Amharc ar fhreagraI propose to take Questions Nos. 177, 181 and 250 together.
The position is that it is a general principle of taxation that, as far as possible, income from all sources should be subject to taxation. In line with this principle, the majority of social welfare payments are reckonable as income for tax purposes. These include long-term payments such as Disablement Benefit, the State Pension, Widows, Invalidity and Blind Pensions, Carers Allowance and the One Parent Family Payment, as well as short term benefits such as Job Seekers Benefit. Treating these payments as income for tax purposes is essentially a matter of equity.
As a result of maternity benefit payments becoming liable to income tax for all claimants, from 1 July 2013, a number of possible tax outcomes could arise:
1. An individual may pay no income tax on their maternity benefit payment as their tax credits will be sufficient to reduce their tax liability to zero.
2. An individual may pay income tax on some or all of their maternity benefit payment solely at the standard rate.
3. An individual may pay income tax at the standard rate on a portion of the maternity benefit and the higher rate on the balance of the maternity benefit payment.
4. An individual may pay income tax on all of their maternity benefit payment at the higher rate.
I am fully aware that some employers do not pay a top up payment to their employees whilst on maternity leave. However, in such circumstances many mothers will not be subject to income tax on their maternity benefit payments as their personal credits will ensure that no tax arises on the social welfare income itself. Of course, the extent, if any, to which taxation actually arises in a given case depends on the level of income that a recipient has in a tax year. Accordingly, the tax liability on maternity benefit payments will ultimately depend on the total income of the individual or couple concerned in the tax year or years concerned.
There are situations currently where an employee continues to be paid by her employer, while on maternity leave and, based on her PRSI contributions, is entitled to Maternity Benefit from the Department of Social Protection. The non-taxation of such benefit currently results in an employee having a greater net take-home pay for the period of maternity benefit, than if she was at work. The rates of Maternity Benefit are earnings-related and are set to reflect post-tax income. It was never intended that individuals would gain financially by being on maternity leave. The introduction of the charge to income tax on maternity benefit payments will ensure that those with identical incomes will be treated the same for income tax purposes.
I would point out though, that maternity benefit payments will remain exempt from Universal Social Charge and PRSI. Given the current budgetary constraints I have no plans to introduce a tax exemption along the lines proposed.
178. Deputy Michael McGrath asked the Minister for Finance if he will provide details of the exemptions in property value for persons who have a disability in respect of the local property tax; and if he will make a statement on the matter. [18226/13]
Amharc ar fhreagraI refer the Deputy to my detailed reply to Parliamentary Question No. 115 on 27 March last. The Finance (Local Property Tax) Act 2012 (as amended) provides two potential measures of relief from Local Property Tax (LPT) for persons who have a disability. Section 10B provides an exemption for permanently incapacitated individuals while section 15A provides for a reduction in chargeable value for properties adapted for use by disabled persons. Section 10B of the Act provides that an exemption from the charge to LPT may apply to a residential property purchased, built or adapted to make it suitable for occupation by a permanently and totally incapacitated individual as their sole or main residence, where an award has been made by the Personal Injuries Assessment Board or a court, or where a trust has been established, specifically for the benefit of such individuals.
Where an exemption cannot be claimed under section 10B of the Act, an incapacitated person may in certain circumstances qualify for a reduction in the market value of their property. Section 15A of the Act provides for a reduction in the market value of a residential property that has been adapted for occupation by a disabled person where the adaptation has been grant-aided or approved for grant aid, by a local authority. Full Details are available on www.revenue.ie.
179. Deputy Mary Lou McDonald asked the Minister for Finance if he will provide the total moneys paid to the Irish Fiscal Advisory Council since it was set up in 2011; and if he will assess the work of the council to date. [18249/13]
Amharc ar fhreagraI announced the establishment of the Irish Fiscal Advisory Council on 7 July 2011. Since that date the Irish Fiscal Advisory Council has been paid a total of €772,881 as follows: €222,008 for 2011, €408,920 for 2012 and €141,953 so far for 2013. The role of the Council is to provide an assessment of, and comment publicly on, whether the Government is meeting its own stated budgetary targets and objectives. It is also charged with assessing the appropriateness and soundness of the Government’s fiscal stance and macroeconomic projections as well as an assessment of the extent of compliance with the Government’s fiscal rules.
To date the Fiscal Council has published four Fiscal Assessment Reports which have been very useful and a welcome input in advance of further budgetary decisions. Their advice continues to inform Government thinking in the development of fiscal policy. The Council is an important element in the reforms we are making to improve Ireland's fiscal framework. Furthermore, the reports of the Council have helped to open up new avenues for a wider discussion on fiscal policy and performance.
A detailed written response to the Fiscal Assessment Report will be included in the Stability Programme Update, and previously was contained in the Budget. However, as I have said before, the real response to the recommendations of the fiscal council is not the words used in a particular report but the policy action the Government is prepared to take arising from the recommendations.
180. Deputy Paschal Donohoe asked the Minister for Finance the reason a person (details supplied) in Dublin 7 is being charged universal social charge on their pension income and income from a home help job that they have despite that income not being assured from week to week; and if he will make a statement on the matter. [18255/13]
Amharc ar fhreagraThe position is that Universal Social Charge (USC) is chargeable on gross income exceeding €10,036 per year. The standard rates of USC are: 2% on the first €10,036, 4% on the next €5,980, 7% on the balance. Revenue records indicate that the income of the person in question exceeds €10,036 per year and, accordingly, she is liable to USC.
Occupational pensions and employment income are both subject to USC. As the person in question has two sources of income, the USC thresholds have been allocated between both sources. USC is deducted on a cumulative basis. This means that deductions are spread out evenly over the year. If the person in question does not have income from her home help job every week, then the threshold allocated will accumulate and be used on the next payday. If, at the end of the year, the person concerned thinks she has overpaid USC, she should contact her local Revenue office for a review of USC deductions. In this regard, the Revenue Commissioners have carried out a review of deductions in the year 2012 and an overpayment of €9.16 has arisen. A refund for this amount will now issue.
182. Deputy Pearse Doherty asked the Minister for Finance following the statement by the Central Bank of Ireland on 7 March 2013 on the use of the deposit guarantee scheme to pay depositors at Irish Bank Resolution Corporation, the maximum period which small company depositors at Irish Bank Resolution Corporation will have to wait before being compensated from the DGS; and if he will make a statement on the matter. [18436/13]
Amharc ar fhreagraAs the Deputy will be aware, on the 7th February 2013, I made a Special Liquidation Order (SLO) pursuant to section 4 of the Irish Bank Resolution Corporation (IBRC) Bill 2013 (the “Act”) appointing Special Liquidators to IBRC. The appointment of the Special Liquidators is a compensation event under Regulation 8A(1) of the European Communities (Deposit Guarantee Scheme) Regulations 1995 (SI No. 168 of 1995) (the “DGS Regulations”). The Central Bank of Ireland is responsible for operating the DGS scheme. The Special Liquidators were directed by the Central Bank to provide the necessary information and assistance to allow duly verified, eligible depositors to be compensated up to a maximum of €100,000 per eligible depositor. I have been advised that in order to verify eligibility, the Special Liquidators must establish that there are no legal rights of set-off of deposits against other liabilities. The Special Liquidators are continuing to work through the process of assessing these set-off rights. The Special Liquidators are unable at this point to say when all cases will be resolved.
In order to be eligible, a small company must be a private limited company satisfying at least two of the following three conditions in respect of the last two financial years: the balance sheet total does not exceed €4.4 million; the amount of turnover for that year does not exceed €8.8 million; the average numbers of persons employed by the company does not exceed 50. These criteria are set out in Section 8 of the Companies Act 1986.
In addition, the nature of the company’s business must not fall within the excluded categories such as financial institution, insurer etc. The Central Bank wrote to all companies that held accounts in IBRC, requesting directors to certify that the company qualifies to be treated as a small company. The position as at 19 April 2013 was: Small Company Claim forms issued to company account holders - 774; Small Company claim forms returned - 124; Of which: Paid - 4; Being investigated by the Central Bank (e.g. unlimited company, dormant company) - 4; Still being assessed for right of set off by Special Liquidator - 116; No reply received - 650.
The Central Bank will make compensation payments to eligible depositors at the earliest possible date (within five working days) following verification by the Special Liquidators.
183. Deputy Pearse Doherty asked the Minister for Finance if he will outline the obstacles which prevent the Financial Services Ombudsman from releasing details confirming the identity of financial institutions against which complaints have been made. [18437/13]
Amharc ar fhreagra184. Deputy Pearse Doherty asked the Minister for Finance if he will provide an assessment of the improvement to competition and probity that would result if the Financial Services Ombudsman was permitted to release details confirming the identity of financial institutions against which complaints have been made. [18438/13]
Amharc ar fhreagraI propose to take Questions Nos. 183 and 184 together.
Firstly, I must point out that the Financial Services Ombudsman is independent in the performance of his statutory functions and it would not be appropriate for me to make any comment on how he does his work. The Financial Services Ombudsman Bureau has long held the position that the public interest would be served by having the ability to publish information on the complaints record of individual Financial Service Providers. The Bureau’s review of international best practice has confirmed this. Consumers will be able to analyse the performance of all financial service providers before making a decision.
I intend to bring forward an amendment at Committee Stage of the Central Bank (Supervision and Enforcement) Bill 2011 to provide the Financial Services Ombudsman with the power to name, in certain circumstances and subject to certain conditions, financial service providers about which the Financial Services Ombudsman has upheld or substantially upheld complaints. The Ombudsman was consulted during the drafting process and is aware of the Government’s intentions in this regard.
185. Deputy Pearse Doherty asked the Minister for Finance further to confirmation that the Central Bank of Ireland has engaged BlackRock International to provide the stress-testing of Irish banks in 2013, if he will outline the principal acquisitions of assets in Ireland by BlackRock since the last stress-testing in January-March 2011. [18439/13]
Amharc ar fhreagra186. Deputy Pearse Doherty asked the Minister for Finance if he will outline the tendering process engaged in by the Central Bank of Ireland before the appointment of BlackRock International to provide services in relation to the stress-testing of Irish banks in 2013. [18440/13]
Amharc ar fhreagra187. Deputy Pearse Doherty asked the Minister for Finance if he will confirm the estimated cost of the stress-testing of Irish banks in 2013; and if he will confirm the component of this cost that relates to non-State entities. [18441/13]
Amharc ar fhreagraI propose to take Questions Nos. 185 to 187, inclusive, together.
The Central Bank of Ireland has supplied my Department with the following information.
In line with EU Procurement Directives, BlackRock were appointed in 2012, following a tender process to establish a framework agreement consisting of 4 lots, for the provision of services under the Central Bank of Ireland’s (CBI) Financial Measures Programme (FMP) including the Prudential Capital Assessment Review (PCAR). On this basis, a number of providers, including BlackRock, were admitted to the framework agreement. The most economic advantageous tender per lot (the company who scored the highest) won the immediate piece of work. The award notice was published on www.etenders.gov.ie/.
As part of the FMP, the CBI is currently developing asset class loan loss forecast models which can be used as part of PCAR. As part of these services, these independent models will be validated by BlackRock (BRS). In addition, BRS are developing the Commercial Real Estate (CRE) asset class model for the CBI. It is therefore expected that this engagement will be completed by end-June 2013. The Framework Agreement is valid for four years. For any future FMP or PCAR requirements throughout the duration of the framework agreement, each firm who has been successful in the particular lot will be invited to participate in a mini-competition if external providers are required. It has not yet been decided whether third party support is required or needed for any stress testing that may be conducted in 2013. Therefore it is not possible to provide an estimated cost of stress-testing the Irish banks for 2013.
188. Deputy Pearse Doherty asked the Minister for Finance further to the recent initiation of legal action in the High Court against several airlines including Aer Lingus, Ryanair and Comhfhirbairt Gaillimh in respect of recovery of the travel tax on short-haul flights if he will indicate the approximate value of the underpayments; and if he will make a statement on the matter. [18442/13]
Amharc ar fhreagraOn 25th July 2012 the EU Commission, in Decision C(2012) 5037 on State Aid Case number SA 29064, found that the difference between the €10 rate of Air Travel Tax and the €2 rate of Air Travel Tax i.e. €8, constituted a State Aid to the beneficiary airlines. On foot of this Decision Ireland is obliged to recover the aid plus recovery interest. My Department has, since then, followed up with the beneficiary airlines and has sought payment of the beneficial aid amount plus interest. In the case of three airlines, Aer Lingus, Ryanair and Comhfhorbairt (Gallaimh) t/a Aer Arann, plenary summonses have been lodged with the Central Office of the High Court. As legal proceedings have been initiated it would be inappropriate to comment further.
189. Deputy Pearse Doherty asked the Minister for Finance if he will outline the tax liabilities that may arise for a debtor if, under the provisions of the Personal Insolvency Act 2012, some debts attaching to the debtor are written-down or written-off. [18443/13]
Amharc ar fhreagraI am informed by the Revenue Commissioners that the only circumstance in which the write-down or write-off of an individual’s debt under personal insolvency may give rise to an income tax liability, is in relation to certain trade debts of the insolvent person. It can only happen in very narrowly defined situations. A person, whose mortgage on their home or on a rental property, for example, is partly written-off, will not suffer any income tax charge on the write-off.
Since 1970, the income tax code provides for the write-off of trade debts to be treated as a receipt of income in the year of write-off. However, carried-forward losses in the trade up to that time can be set against that income and may well reduce the charge to zero. This applies to all traders and professionals, whether in insolvency or not. This year’s Finance Act (section 18) introduced a similar provision relating to the write-off of loans used to acquire and develop land as part of a trade of land dealing or development. The new provision operates in the same way as the 1970 provision but is even more restricted in that it only applies to land dealers and developers. From an income tax point of view, the consequences of debt write-off are exactly the same, whether insolvency is involved or not.
I am further informed by the Commissioners, that within the past month, they have made it clear, publicly, that where for bona fide commercial reasons, a financial institution enters into a debt restructuring, forgiveness or write-off arrangement with a customer, then Revenue’s approach is to accept that the financial institution is not intent on making a gift to the debtor and, consequently, no charge to Capital Acquisitions Tax will arise. However, where the bona fides of such arrangements are open to question or tax avoidance is involved, then this approach does not apply.
There are no capital gains tax or value added tax implications associated with any benefit that might arise to a debtor from the writing-down or writing-off of a debt under the provisions of the Personal Insolvency Act 2012. In summary, I can say that in the majority of cases of personal insolvency, which may involve mortgage default on family homes and which will come within the ambit of the new Personal Insolvency Act 2012, there will be no tax consequences of any kind.
190. Deputy Pearse Doherty asked the Minister for Finance if he will outline any representations that he or his Department has received from, or on behalf of, borrowers at the Irish Bank Resolution Corporation in special liquidation, after the announcement of the special liquidation of IBRC on 6 February 2013. [18444/13]
Amharc ar fhreagraAs the Deputy is aware, representations are received in a number of ways including representations through political representatives, from individuals directly, from legal representatives of clients of the bank etc. These representations are received through a number of channels including mail, e-mail and primarily by telephone contact. The overall number of written representations relating to borrowers of IBRC (in special liquidation) received since the 6th of February total 9. As a general rule the Department does not become involved in individual cases and will refer borrowers to the bank, to the Central Bank or to the Financial Services Ombudsman etc. as appropriate and depending on the circumstances of the case. It would not be appropriate for me to comment on the content of personal representations that have been received.
